European Union Objects to Ireland’s Intention to Establish Minimum Prices for Tobacco

The Irish Fiscal officials claim they have agreed with tobacco companies to establish minimal prices for tobacco products primarily in order to crack down the sales of low-cost cigarettes across the country. The government considers that assigning the bottom limit for retail price of a pack of 20 cigs would prevent sellers from the capability to offer particular brands at the reduced prices.
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However, The European Union’s Trade Commission has argued that Ireland government is not qualified to establish the minimal prices for tobacco products, including cigarettes. In case the Commission challenge against the government of Ireland, which is due to be considered during the first week of March, will win, Irish smokers could see prices on cigarettes and other tobacco items drop in the nearest future.

Back in 1995 the European Union adopted a Manufactured Tobacco Tax Directive according to which tobacco products’ retailers and manufacturers are allowed to establish the maximum prices for their merchandise. However, Ireland has its own tobacco regulations implemented in 1986 concerning marketing, promoting and advertising of tobacco products. Under those regulations, sales of cigarettes with a discount more than 3 percent of retail price are prohibited.

Irish officials state minimal prices are obligatory for protecting both smokers and non-smokers by assuring that cigarettes are selling at a relatively high price. They underline that EU Directive only concerns the maximum prices, and not the minimal ones. However, the European Commission is getting ready to declare that Ireland has violated its commitment in conformity with the 1995 directive. Similar challenges have been also announced against Austria and France.

Several months ago, Advocate General for European Union Justice Court, Juliane Kokott discovered the issue in Ireland. Though the views of the Advocate General are not mandatory, her opinion is often followed. Mrs. Kokott questioned the legitimacy of Irish law, stating that establishing minimal prices breached with the tobacco companies’ right to establish a maximum price, which should not be below than the limit established by the government. The Advocate General admitted that EU member-countries are able to raise the excise taxes on tobacco products, and that has been the effective way to lower smoking rates and protect public health.
The ruling of the Court of Justice is expected to be announced on March 4th.

According to last year’s data, the Revenue Commission generated nearly €1.22 billion in excise taxes in 2009, in comparison to €1.17 billion in 2008.

Also in tobacco-related news, Irish customs agents confiscated last week cigarettes worth nearly €12 million from a warehouse in Dublin suburbs. The illegal products were smuggled to the country in bulk pallets of timber.

The spokesman for the Irish Association of Tobacco Manufacturers claimed that cigarettes illegally imported into the country, deprived Ireland from €526 million in lost taxes in 2009. And such losses are simply inadmissible at the time of severe recession.
By Clark Moore, Staff Writer
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